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Group Audit (Revision to SSA 600 and Update of ACRA Audit Practice

Keeping Auditing And Assurance Standards Fit-For-Purpose
Wang Zhumei
Terence Lam
BY Wang Zhumei and Terence Lam


  • When auditing and assurance standards are not robust, or are insufficiently current to keep pace with the changing demands of stakeholders, their value and relevance diminish.
  • Auditors should keep abreast of the developments on the auditing and assurance standards; here are the key developments of relevance: SSA 600 (Revised); exposure drafts ISA 570 (Revised), ISA 500 (Revised), ISA for Audits of Less Complex Entities, and ISSA 5000.

There was a time when public accountants could lay claim to the ability to remember every paragraph of the auditing and assurance standards. However, with the latest edition of the International Auditing and Assurance Standards Board (IAASB)’s Handbook running at more than 1,300 pages long, probably few could make such claims today.

A common joke is that standard-setters continuously amend the standards to keep auditors employed. In reality, when the standards are not robust or current enough to keep pace with the changing demands of stakeholders, the value and relevance of audit and assurance is diminished.

External audit and assurance remain integral pillars of the financial reporting ecosystem. High-quality audit and assurance reports continue to play a pivotal role in enhancing trust in the capital markets and instilling confidence in the decision making of stakeholders.

Macroeconomic and geopolitical developments, as well as evolving business and audit environments, necessitate the need for the constant review of existing auditing and assurance standards to ensure that they remain fit-for-purpose. Here, we share some key developments on the auditing and assurance standards.

1. SSA 600 (Revised) Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors)1

Singapore Standard on Auditing (SSA) 600 (Revised), issued in March 2023, deals with special considerations that apply to a group audit, including in those circumstances when component auditors are involved. The revised standard is effective for audits of group financial statements for periods beginning on or after 15 December 2023.

SSA 600 (Revised) seeks to achieve the following outcomes:

  • A new risk-based approach for greater focus on addressing risks

A well-informed risk assessment and the corresponding design of audit procedures to address identified risks are critical to audit quality, especially in light of the increasing complexities of group business environments.

In extant SSA 600, the group auditor identifies “significant components”2 of the group and performs an audit of the financial information of these components. In the revised standard, the concept of “significant component” is removed. Instead, the revised standard introduces a new approach for planning and performing a group audit engagement, referred to as the risk-based approach.

The risk-based approach emphasises the need for the group auditor to think about whathow and by whom and where of the work that is to be performed.

– What: determining significant classes of transactions, account balances or disclosures in the group financial statements when identifying and assessing risks of material misstatement of the group financial statements at the assertion level;

– How: determining the most appropriate audit strategy (for example, centralised or decentralised testing, or a combination) and the nature, timing and extent of further audit procedures to address the assessed risks of material misstatement of the group financial statements; and

– By whom and where: determining whether the group auditor or component auditors will obtain audit evidence in response to the assessed risks of material misstatement of the group financial statements, and the components at which audit work will be performed.

This new approach helps the group auditor to “re-think” the group audit strategy to allow for a greater focus on how the assessed risks of material misstatement of the group financial statements are addressed, instead of just defaulting to “an audit” of the component financial information.

  • Encouraging proactive management of quality

SSA 600 (Revised) encourages the proactive management of quality in group audits through:

– Managing and achieving quality in a group audit: clarifying how the requirements in SSA 220 (Revised)3 apply to manage and achieve audit quality in a group audit, including sufficient and appropriate resources to perform the engagement, and the direction and supervision of the engagement team and the review of its work;

– Restrictions on access to information or people: clarifying the various types of restrictions that may exist, such as restrictions on access to people and information, and component auditor audit documentation. Guidance is also provided on ways to overcome such restrictions;

– Materiality considerations: clarifying how the concepts of materiality and aggregation risk4 apply in a group audit.

  • Reinforcing the need for robust communication and interactions during the audit

Recognising that robust communication and interactions between the group auditor and component auditor(s) are critical for the effective execution of group audits, the revised standard strengthened and clarified:

– The importance of two-way communication between the group auditor and component auditors;

– Various aspects of the group auditor’s interaction with component auditors, including communicating relevant ethical requirements, determining competence and capabilities of the component auditor, and determining the appropriate nature, timing and extent of involvement by the group auditor in the work of the component auditor.

  • Independence considerations in group audits

Are you auditing a subsidiary of a public interest entity (PIE) and reporting to a group auditor? If yes, you may be impacted by the upcoming revisions to the ethics code (expected effective date of 15 December 2023).

Where the group audit client is a PIE, independence provisions applicable to PIEs would also apply to the component auditors reporting to the group auditor firm for purposes of the group audit. As such, PIE independence requirements such as those relevant to key audit partners and partner rotation and the permissibility of a non-assurance service to an audit client, would also apply to non-PIE component auditors who are outside of the group auditor firm’s network.

2. Exposure Draft on ISA 570 (Revised 202X) Going Concern5

Corporate failures across the globe in recent years have brought the topic of going concern to the forefront and led to stakeholder demands for enhanced transparency on going concern. Macroeconomic and geopolitical developments have also led to heightened risks, drawing attention to the challenges and issues pertaining to the auditor’s responsibilities and work related to management’s assessment of an entity’s ability to continue as a going concern.

ISA 570 (Revised) Going Concern6 deals with the auditor’s responsibilities in the audit of financial statements relating to going concern and the implications for the auditor’s report. In response to these developments, IAASB is proposing revisions to ISA 570 (Revised) in its exposure draft to strengthen the auditor’s evaluation of management’s assessment of going concern, and bolstering communications and reporting requirements in relation to going concern.

ISCA has commenced outreach activities to solicit feedback from members and stakeholders on the proposed revisions. Stay tuned to the ISCA website in August for our response to the exposure draft.

3. Exposure Draft on ISA 500 (Revised) Audit Evidence7

ISA 500 explains what constitutes audit evidence in an audit of financial statements, and deals with the auditor’s responsibility to design and perform audit procedures to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor’s opinion.

The proposed revisions in the exposure draft recognise the changes in information used by auditors and the evolution of technology in businesses and audits, including the usage of automation tools and techniques. They also emphasise the importance of applying professional scepticism when making judgements about information to be used as audit evidence, among others.

ISCA has responded to the exposure draft. While ISCA is supportive of the enhancements to modernise the standard, we proposed further elaboration on the use of data analytics to support and facilitate its adoption. Practical implementation challenges that auditors contend with when applying data analytics include the extent of testing of the underlying data used, assessment of audit evidence obtained from data analytics procedures and dealing with exceptions. Addressing these practical issues in the standard will help provide the impetus to drive the adoption of data analytics.

The finalised standard is expected to be issued by IAASB in the second half of 2024.

4. ISA for Audits of Less Complex Entities (ISA for LCE)8

Observing that auditing standards have become longer and more complex over time, IAASB is developing a separate standalone standard for the audit of less complex entities. Two exposure drafts were issued on the proposed ISA for LCE in July 2021 and January 20239.

In Singapore, mixed views were received on the proposed standard. On the one hand, some practitioners welcomed the more concise standard designed with easier application for audits of less complex entities, which could potentially lead to more efficient audits. On the other hand, other practitioners do not see a need for a separate standard since the current ISAs are supposed to be principles-based and scalable. There were also concerns raised on training audit staff on two different sets of standards and whether users of financial statements would perceive an audit conducted using ISA for LCE to be of lower quality and, correspondingly, view the audit opinion issued as “second tier”.

To address the concerns raised, IAASB is looking into proportionate revisions to ISA for LCE to be more tailored to less complex entities, in order to further distinguish between ISA for LCE and the current ISAs. The finalised standard is expected to be issued by IAASB in December 2023. Thereafter, ISCA would undertake outreach activities with stakeholders to decide if it would be adopted in Singapore. 

5. Exposure Draft on ISSA 5000 – Overarching Standard for Assurance on Sustainability Reporting

As investors, regulators, and a broad range of stakeholders seek reliable and comparable reporting on companies’ performance on non-financial sustainability measures, the demand for assurance engagements that enhance the degree of confidence of the intended users of sustainability reporting information is rapidly growing.

To address this demand, IAASB is developing a new overarching standard for sustainability assurance engagements – the proposed International Standard on Sustainability Assurance (ISSA) 5000 General Requirements for Sustainability Assurance Engagements, which is intended to apply to the assurance of sustainability information across multiple topics and reporting frameworks. The public consultation on the exposure draft of ISSA 5000 is expected to open in Q3 2023.


Staying at the forefront of developments in the auditing and assurance arena will equip auditors with the necessary expertise to excel in their role. Members can do so through ISCA’s Practitioners’ Bulletin as well as our guidances and bulletins. Look out for our upcoming guidance on the significant changes and implementation challenges relating to SSA 600 (Revised) in the second half of this year.

Have views to share?

Please look out for our latest consultations and write to us at Professional Standards to share your feedback.

Looking for events or courses?

Register for our upcoming ISCA Conference 2023. You may also check out our list of courses curated for audit practitioners.

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Wang Zhumei is Associate Director, Professional Standards, ISCA; Terence Lam is Head of Department, Professional Standards, ISCA.

1 With reference to IAASB’s Basis for Conclusions on International Standard on Auditing (ISA) 600 (Revised)

2 As defined by paragraph 9(m) of SSA 600, a significant component is a component identified by the group engagement team (i) that is of individual financial significance to the group, or (ii) that, due to its specific nature or circumstances, is likely to include significant risks of material misstatement of the group financial statements

3 SSA 220 (Revised) Quality Management for an Audit of Financial Statements

4 Aggregation risk (new definition) – the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole

5 With reference to IAASB’s exposure draft on ISA 570 (Revised 202X)

6 ISA 570 (Revised) Going Concern; the SSA equivalent of this standard is SSA 570 (Revised) Going Concern

7 With reference to IAASB’s exposure draft on ISA 500 (Revised) Audit Evidence; you can read the full response submitted by ISCA to IAASB here

8 With reference to IAASB’s exposure drafts on Proposed ISA for LCE, and Proposed Part 10, Audits of Group Financial Statements of the Proposed ISA for LCE

9 You can read the responses submitted by ISCA to IAASB on exposure drafts on Proposed ISA for LCE, and Proposed Part 10, Audits of Group Financial Statements of the Proposed ISA for LCE

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